Can Someone Assume My VA Loan
Sometimes, things just don’t work out right for you no matter how much planning and effort you’ve put into it. This could happen with your VA loan as well. The U.S. Department of Veteran Affairs certainly understands the possibility of this happening, and that’s why they’ve set rules and regulations regarding of release of liability and assumption for people having trouble with their VA loans.
Even though VA loans can certainly be assumed by other people, it’s still best for individuals to prevent this from happening in the first place. Before applying for a VA loan, make sure that you’re ready for the responsibilities associated with loan borrowing. Secondly, make sure that you’ll be using your VA loan for the right purposes.
The basic rule on release of liability and assumption of VA Loans
Say you’ve applied for a VA loan and have been approved. You’ve got yourself a home, but after a certain period of time, regardless of the reasons you have for doing so, you wish to wash your hands off the property.
Your first option is, of course, to sell the property. This however will not waive your liabilities. You will still be held fully accountable for paying your VA loans on time, even if the property is already owned by someone else.
There is, however, a second option: you can always have someone else assume your loan. To do so, you must approach the necessary government department and request for a release of liability for your VA loan. If your request has been approved, all your responsibilities as the original VA loan borrower will be immediately transferred to the person assuming your loan.
If, for instance, the person who had assumed your loan has been unable to make the required payments on time and the property ends up foreclosed or going into default, you will not be held liable for what happened.
Three ways for VA Loans to be assumed
A VA loan can be assumed in three ways, depending primarily on when you have obtained the VA Loan.
VA Loans borrowed before March 1, 1988
Military individuals who have been able to obtain VA loans before March 1, 1988 are quite lucky because their loans can be freely and instantly assumed by any other person and even those haven’t served in the military in any capacity. They can have other people assume their responsibilities without even having to report their decision to the government.
To make things official, however, the VA loan taker must contact the necessary government department and request for an information packet. This packet contains a set of information brochures that will help the buyer and seller of the home acquired through a VA loan their new set of responsibilities. It will also include the necessary forms that they’ll have to submit to the U.S. Department of Veteran Affairs in order for the original VA loan taker’s Release of Liability (ROL) to become official.
Once the forms have been accomplished and duly submitted, the government will then review the forms and make a decision afterwards.
VA Loans borrowed after March 1, 1988
VA loans obtained by the military individual after March 1, 1988 are NOT freely assumable. In other words, the original VA loan taker must inform the necessary authorities about their intentions and gain prior approval before they can succeed to the next steps.
The person in authority will then provide a set of instructions for the military individual to follow in order for his request of Release of Liability to be processed.
If the person assuming the loan qualifies based on VA standards, he or the original VA loan taker will have to pay a processing fee, costs of credit reports and appraisals, as well as a funding fee.
Unrestricted transfers of VA Loans
If the original VA loan taker dies, the heir/s will have to contact the necessary authorities to make transfer of ownership official. If the original VA loan taker is obtaining a divorce, he or the spouse may also submit a request for Release of Liability if they so wish.
A VA loan is more like a privilege, and it’s a privilege that not everybody is entitled to. If you’re lucky enough to be eligible for a VA loan, do your best not to waste this golden opportunity.
John G. Edwards is a consultant that has helped many people with their finances. If you are considering getting a loan, a mortgage, refinancing, or interested in VA loan information you should checkout the articles at http://www.VA-Mortgage.us